Market report: Rio’s iron ore production declines as miners struggle with rain, labor shortages and tribal caves scandal
Rio Tinto’s iron ore production has been affected by heavy rains, labor shortages and drastic measures to protect cultural heritage sites.
The volume of the key metal used to make steel – which was shipped to the FTSE 100 group – fell 12 percent in June in the three months to last year. This translated to about 76m tonnes.
The severe weather halted operations several times and struggled to find skilled workers due to COVID.
Triple whammy: The amount of iron ore shipped by the Rio Tinto Group declined by 12 percent in the three months to June compared to last year. This translates to about 76m tonnes
But the loss of a nearly 2m tonne shipment comes as Rio works to repair its reputation in the wake of the Jukan Gorge tragedy last May, when it blew up two sacred aboriginal caves to expand an iron ore mine.
It said this year it has changed mine plans and added several buffer and exclusion zones in areas that serve to “protect areas of high cultural importance”.
Boss Jakob Stosholm said that since the destruction at Jukan Gorge Rio “reflected the magnitude of what was lost by our actions, and that the hurt we have caused will never be forgotten”.
Stock Watch – Lusecco
Lighting maker Lusecco broke sales expectations as home renovations that began during the first COVID lockdown continued to accelerate.
Luseco specializes in LED (light emitting diode) lighting. LEDs are designed to last longer and are more efficient than other types of bulbs – making them popular for those looking to go green.
First half revenue came in at £105million, up from estimates of £105m.
The profit was £19million on the forecast of £18million.
Shares of the group, which expect annual earnings to also outpace forecasts, rose 3.2 percent, or 12p, to 393p.
After a tough quarter – during which copper production also fell – Rio said it now expects its iron ore production to be at the low end of the directed range of 325 million to 340 million tonnes for the year.
Fortunately for Rio, a spurt in iron ore prices could mean that lower production is not felt very keenly. The metal, which is heavily imported by China, currently stands at $220 a tonne – doubling in value from December.
Prices of other major metals like copper have also jumped since the onset of covid and now the global economy is starting to recover and there is a high demand for raw materials.
But shares of Rio (3.4 percent, or 211p, down from 5931p) fell yesterday along with other heavyweight mining firms in Futsy as prices of several commodities fell in the day’s trading session.
Rio declined, Glencore (3.5 percent, or 11.05p, down 309p), Anglo American (2.8 percent, or 84p, down from 2889p), Evraz (2.5 percent, or 15.2p, down 593.4p), and others. Dragged on the blue-chip index.
The FTSE 100 fell 0.06pc or 3.93 points to close at 7008.09 after failing to hold on to early gains. The FTSE 250 fell 0.2pc or 34.25 points to end at 22467.
While it did not catch on in the broader market, stocks in many companies saw an Independence Day rally as traders waited for the loosening of Covid restrictions in England on Monday.
Shares in Premier in-owner Whitebread (up 1.7 percent, or 50p, up 2924p), Weatherspoon (1.1 percent, or 12p, up 1074p) and Mitchell & Butler (1.3 percent, or 3.4p, up 262p) all rose, While Cineworld reached 9.8 percent, or 5.62p, at 62.94p.
But the unbridled optimism that sometimes gripped the market was somewhat boosted yesterday with Covid cases rising to their highest level since mid-January.
Scientists’ warnings that worse could be ahead, and hundreds of thousands of ‘pings’ of Covid apps forcing people to self-isolate, also cast the grand reopening in a different light .
Micro Focus announced that it settled a three-year patent dispute with rival WAP Tech with a £49 million payment, slightly less than it expected to spend.
WAP Tech filed a claim against the software group in July 2018. Shares in Micro Focus — which said the cost would be recognized as a lump sum in its half-year results — initially gained but later closed down 1.2 percent, or 4.8. p, at 402.2p.
Bitcoin miner Argo Blockchain has been fueled by baseless rumors on social media that Tesla has bought a stake in the company.
Elon Musk, the founder of the electric car maker, has endorsed crypto-currencies, but there was no word on his behalf or from Argo whether it was anything more than a rumour.
Argo shares rose 17.5 per cent, or 15.2p, to 102p.